Medicare Compliance & Reimbursement

Feds analyze pair of pharmacy assistance programs for report.

As the federal government takes on more of the country's drug cost burdens under Medicare Part D and pharmaceutical companies continue to raise their prices, providers could find themselves caught within a cost-cutting tug-of-war.

Report Reveals U&C Price Tags

In a study released on Sept. 15, the Government Accountability Office says that drug prices skyrocketed from January 2000 to December 2004. The GAO obtained the usual and customary prices from two state pharmacy assistance programs and reviewed the pricing trends of 96 drugs that Medicare and non-Medicare Blue Cross and Blue Shield Federal Employee Program (BCBS-FEP) enrollees frequently use.

Average U&C prices for these drugs increased 24.5 percent during the four-year time period. The GAO compared the increases of the U&C price--the price that an individual without prescription drug coverage would pay at a retail pharmacy--to increases in the average manufacturer price (AMP) and the average wholesale price (AWP).

Average U&C price increases for 75 of the 96 prescription drugs that Medicare beneficiaries frequently use were similar to increases for 76 drugs that non-Medicare enrollees used.

Brand Names Get Big Price Bump

The GAO report found that pharmaceuticals with brand names got a lot more expensive. There were 50 brand prescription drugs whose average U&C prices increased three times as much as the average U&C for 46 generic drugs, according to the GAO.

"AWPs increased at a faster rate than AMPs and U&C prices for the 50 frequently used brand drugs from first quarter 2000 through fourth quarter 2004," the GAO notes.

To read the report, go to http://www.gao.gov/new.items/d05779.pdf.